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CFAnews Update – October 17, 2019

Even as the Trump Administration revoked the right of states to adopt auto emissions standards, two more states — Minnesota and New Mexico — took the first steps towards joining 14 other states in adopting low- and zero-emission vehicle standards that are more stringent than national standards. CFA Executive Director Jack Gillis praised the states’ action, noting that clean-car states have provided vital leadership in advancing the higher standards that have been consistently supported by a majority of the public regardless of political affiliation.

“Revoking the right of states to adopt a more stringent emissions standard, guaranteed under the Clean Air Act since 1975, completely disregards the will of over 118 million Americans in the fourteen states and the public, who have chosen to bring cleaner, cost-saving, fuel efficient cars to their communities,” Gillis added, citing the support for the standards by an amazingly diverse group of stakeholders, including consumers, automakers, business groups, unions, national defense experts, public health advocates, and environmentalists.”

One of the great benefits of American federalism is that individual states can discover better ways of accomplishing shared goals, Gillis noted. New Mexico and Minnesota have decided that it is in the best interest of their citizens to join together with the other clean-car states, and their ability to do so shouldn’t be blocked by the Trump Administration’s misguided determination to roll back common sense fuel economy standards and to take away the ability of states to adopt a more stringent emissions standard, he added.

“By attempting to take away this critically important state authority, President Trump will simultaneously increase consumers’ costs at the pump, make U.S. vehicles less competitive, and throw America in reverse when it comes to a cleaner environment…Now is not the time to put the brakes on a remarkable opportunity to protect consumers, car companies, and our country,” concluded Gillis.

The U.S. Department of Agriculture (USDA) issued a final rule to overhaul hog slaughter inspection earlier this month, an action CFA Director of Food Policy Thomas Gremillion said “puts industry profits ahead of public health.”

“Higher line speeds, fewer inspectors, and no microbiological pathogen performance standards are a recipe for a food safety disaster,” Gremillion added, noting that “Contaminated pork sickens hundreds of thousands of people each year in the United States, and causes over 10% of illnesses from Salmonella. The stakes are simply too high to rush forward with a rule like this that introduces sweeping changes to the inspection system without reliable measures in place to assess their impact.”

“When USDA proposed this rule, CFA opposed it because the agency did not show that it would improve food safety. The rule would expand a pilot program that USDA has carried out for over a decade. The evidence from the pilot does not indicate that it helped to significantly reduce fecal contamination, Salmonella levels, or otherwise improve food safety,” stated Gremillion.

Gremillion also faulted USDA for procedural irregularities in its adoption of the rule, including basing its action on a risk assessment that should have undergone peer review before USDA proposed its rule, but did not. Instead, the peer review took place after the comment period closed on the proposed rule, and three of five reviewers concluded that the assessment was irredeemably flawed. Despite that fact, USDA concluded that none of the peer reviewers’ comments required changes to the proposed rule.

“Unfortunately, that was not the only procedural irregularity in this rule,” Gremillion said, noting that USDA claimed that higher line speeds would not affect workers on the basis of data that it refused to disclose. “When advocates finally got their hands on the data that USDA cited, it turned out that it did not support that conjecture at all,” added Gremillion.

“[The] USDA received close to 80,000 comments on this rule, yet the agency has neglected to make any significant changes in response. The final rule promises that USDA will ‘decide in 2019’ whether it will develop microbiological performance standards that it could use to actually measure the food safety impact of these radical changes. Similarly, the final rule still contains no training requirements for company ‘sorters’ that take over government inspection responsibilities.

“For USDA to go ahead and finalize this rule with that investigation ongoing shows that politics, rather than science, is what’s driving this process,” Gremillion stated. “The American public is not fooled. Our polling has shown widespread public opposition to this proposal. Now it will be up to Congress to prevent this dangerous privatization scheme from going forward.”

Led by CFA, thirty-six consumer, privacy, civil rights, and public interest organizations warned of major privacy and security concerns posed by the Bureau of Consumer Financial Protection’s proposed plan to implement new debt collection rules under the Fair Debt Collection Practices Act (FDCPA). Privacy was one of the major concerns prompting the enactment of the FDCPA, but the proposed rules would jeopardize consumer’s privacy at a time when there are already serious concerns about rampant robo-calling, online privacy, data breaches, and identity theft.

”It’s unacceptable to allow debt collectors to reduce their costs by using new technologies to communicate with consumers at the expense of those consumers’ privacy and security,” said Susan Grant, CFA Director of Consumer Protection and Privacy.

In their comments, the groups highlight six areas of particular concern:

The frequency of communication is a privacy concern. In response, the groups argue that a debt collector should be limited to three attempted calls and one conversation per consumer per week, regardless of the number of debts the firm is attempting to collect from that consumer.

Debt collectors should get consumers’ affirmative consent for electronic communications and fully comply with “E-Sign” requirements. Arguing that use of texts and emails by debt collectors will increase dramatically, if permitted, the groups strongly opposed the Bureau’s plan to put the burden on consumers to opt out of such communications. “Silence on the consumer’s part does not constitute agreement,” the groups wrote. “The obvious solution is for debt collectors who wish to communicate with consumers electronically to obtain their prior affirmative consent to use a particular email address or cell phone number for that purpose.”

Communications via social media platforms and private messaging services are inherently unsafe for privacy and security. The groups strongly opposed the Bureau’s proposal to allow debt collectors to communicate with consumers by posting messages on webpages of social media platforms or sending direct messages to them through those platforms as long as the messages are not viewable by others. Social media platforms cannot be trusted to keep information private from outsiders or from their own voracious data collection activities, the groups warned. “To protect consumers’ privacy and security, debt collectors should not be allowed to use social media platforms or direct messaging as a means of communicating with them.”

“Limited-Content” messages would put privacy at risk. The groups also voiced concerns about the privacy implications of permitting collectors to relay “limited-content messages” related to the debt to the consumer and to third-parties in an attempt to locate the consumer. “Limited content messages threaten consumers’ ability to keep information about debts private and may indicate that consumers owe debts when in fact they do not,” the groups wrote, arguing that this proposal should not be implemented.

Hyperlinks present privacy and identity theft risks. The Bureau has proposed to allow debt collectors to send texts or emails to consumers containing hyperlinks to the validation notice, a practice which a federal appeals court recently found to violate the FDCPA. Arguing that none of the disclosures that debt collectors are required to give consumers should be allowed to be provided via hyperlinks, the groups stated that, “Consumers should not be forced to choose between the risk to their privacy and security and the ability to receive important information about debts and their rights in that regard.”

The privacy harms from debt collection abuses, both tangible and intangible, are real. Aggressive debt collection practices can result in serious harms to peoples’ jobs, relationships, and personal data.

In a separate letter to the Bureau of Consumer Financial Protection, CFA and 231 other advocacy groups voiced their concerns and opposition towards other aspects of the CFPB’s proposed debt collection rule including a lack of protection against “zombie debt,” and misleading and deceptive debt collection practices, debtor contact frequency, the proposed validation notice model, and “parking” debt on credit reports. The letter urged the Bureau to “go back to the drawing board, reject the proposed rule, and start over again” in order to protect consumers from harassing and abusive debt collection practices.

“Debt collection practices are a leading source of consumer complaints. Instead of addressing consumer concerns, the CFPB is looking for ways ease compliance challenges for debt collectors. We need the consumer protection agency to focus on protecting the public,” stated Christopher Peterson, CFA Director of Financial Services and Senior Fellow.

In response to the Consumer Financial Protection Bureau’s advanced notice of proposed rulemaking, CFA and other consumer advocacy groups submitted comments highlighting their concerns regarding possible revisions to the Qualified Mortgage (QM) definition and the expiration of the GSE patch and outlining principles for a pro-consumer rule.

In the letter, the groups stressed the importance of the Bureau keeping the dual purposes of the Dodd-Frank Act mortgage origination rules, access and ability to repay, front and center. As the Dodd-Frank Act recognized, access to responsible, affordable credit, which builds wealth, is dependent on creditors making reasonable determinations of ability to repay. Access to un-affordable credit is destructive, as the financial crisis that led to the Dodd-Frank Act showed.

In addition to highlighting the importance of the dual focus of the mortgage origination rules, the letter outlines five additional principles representing key tenets for the Bureau’s QM rulemaking:

Ability to repay must remain part of the Qualified Mortgage definition to protect borrowers.

Credit risk is distinct from the statutory requirement of consideration of ability to repay.

Restrictions on high-risk products and features should not be altered.

Seasoning is not an appropriate measure of ability to repay.

A single debt-to-income ratio (DTI) threshold, in the absence of the patch or other broader underwriting, would undermine the statute and constrict access to credit.

“The ability to repay provisions are among the most powerful consumer protections in the Dodd Frank Act,” noted Barry Zigas, CFA Senior Fellow. “How the Bureau moves forwards on the Qualified Mortgage provisions – which provide an irrefutable safe harbor presumption that lenders have in fact assessed a consumer’s ability to repay his or her loan – will determine how well they continue to protect consumers from abuse,“ added Zigas.

A U.S. Department of Energy (DOE) proposal designed to “speed the availability of innovative product options to consumers” makes the process of granting an application for an interim test procedure waiver quite opaque and puts consumers at risk of buying products that may not meet minimum efficiency standards, CFA and the National Consumer Law Center warned in comments submitted to the agency last month.

The proposed change could leave competing, more compliant manufacturers in the dark and put consumers at risk of buying a non-compliant, less-efficient product, the groups warned. These concerns arise from a number of factors including:

The proposal gives foreign companies the ability to avoid full compliance and potentially gain advantage over American companies that may be more inclined to comply.

The test procedure interim waivers would be automatically ‘deemed granted’ for a product after the initial 30 business days.

And, there would be no public notice that this is occurring.

“[The] DOE’s proposal for interim test procedure waivers presents too easy an opportunity for a company that wishes to evade its compliance obligations to ‘game’ the system simply by submitting a waiver request, even if it is meritless…this proposed change will have less to do with ‘speeding the availability of innovative product options to consumers’ but will more so function as a way for less-scrupulous manufacturers to undercut the interim test procedure waiver process so that products that may not ultimately meet efficiency standards can be sold until a final determination is made,” stated CFA Director of Energy Programs, Mel Hall-Crawford.